Here's some good news for some: The Financial Times reports that, "The Federal Reserve is this week expected to pave the way for a doubling of bank dividends and share buybacks when it unveils the results of stress tests on the largest US financial groups. If Citigroup passes the test, as expected, it will be in a position to pay more than a notional 1 cent a share dividend for the first time since the financial crisis...Analysts expect JPMorgan Chase, among the strongest of international banks, to pay more than 70 per cent of its earnings in the form of dividends and share buybacks, close to pre-2008 levels." Anecdotally, I was in a group a few weeks ago that John Stumf of Wells Fargo addressed, and he was practically giddy about its stock price and dividends...

And there is good news on the hiring front: a $2 billion Mortgage bank in Northern California is looking for a SVP of Compliance. This position will be responsible for developing risk management policies and advising company leadership of new and changing regulatory risks; developing and implementing company's policies and procedures for compliance based on all federal regulations and state laws , including Financial Reform, NMLS, SAFE Act, AIR, MDIA and RESPA Reform; managing all federal, government, and/or state applications for licensing, lending and/or brokering for company and affiliates; and coordinating internal compliance review and monitoring activities. Resumes should be sent to me at

And in Southern California, JMAC Lending is looking for experienced underwriters and funders for its Irvine location. JMAC has been around for over twenty years, and has expanded operations to include licensing in seven states. For more information about the company, visit, and resumes should be directed to 

Freddie Mac announced that it has posted a net income of $619 million for the quarter ended December 31, 2011 and total comprehensive income of $1.5 billion. For the entire year of 2011 Freddie Mac had a net loss of $5.3 billion and comprehensive income of $(1.2) billion compared to $(14.0) billion and $0.3 in 2010. The shift from a net loss to a net gain in the fourth quarter reflects lower derivative losses due to a smaller decline in long-term interest rates and a decrease in the provision for credit losses on single-family loans.  Freddie had a net worth deficit of $146 million at the end of the quarter and will submit a request to the Treasury Department for a draw in that amount.  This will be more than offset by a quarterly dividend payment of $1.7 billion to Treasury on its holdings of Freddie Mac Senior Preferred Stock.  With this draw Freddie Mac will have received $7.6 billion from Treasury for 2011 and paid $6.5 billion in dividends. For those playing along at home, since August 2008 Freddie Mac has drawn $72.3 billion from Treasury and paid dividends of $16.5 billion.

Overall in 2011 Freddie financed 1,859,072 residential properties of which 320,753 were multi-family units, down from 2,115,302 mortgages in 2010. In its release Freddie noted that the loans it acquired after 2008 accounted for only 1% of its credit losses while loans originated between 2005 and 2008 represent 90% of those losses (with nearly a 9% delinquency rate). Multifamily originations by FNMA and FHLMC are at record highs, indicating that the rental market is indeed strong. Sales of properties totaled $3.8 billion in January, a 53% increase from a year earlier, with rates for this type of product in the low 4% range.

(Turning to underwriting for a moment -most updates were posted in the Saturday commentary - LO's are especially interested in the fact that Fannie has recently updated DU to include when a loan is over 75% LTV and the DTI is greater than 45%, DU is now asking for 12 month reserves. In a split, however, Freddie Mac has not made this same change to LP. So one can expect LO's to take advantage of this on a small number of loans if they can go to both agencies.)

Fannie announced an initiative to make loan-level data for single-family MBS accessible as a move towards transparency. The agency will start releasing loan-level data beginning the first quarter of 2012 and will provide data updates regularly. Obviously investors in agency MBS, and all MBS, want to know what they're buying, and this is another step in the direction of restoring investor confidence. The first release of loan-level data files for single-family MBS will be downloadable and published under the "New Issues Statistics" tab in PoolTalk, which is a tool that retrieves pool-level information and data on Fannie Mae securities. Concurring with the release of the loan-level data will be new features on PoolTalk, including the ability to view data on a specific pool and monitor data for specific securities at a glance. Daily issuance files, month statistics, and MBS-related documents will be accessible through PoolTalk.

But the top 70 executives at F&F were told by the FHFA that their salaries would be limited to $500,000, and bonuses would be eliminated. The change came after Congressional leaders ridiculed the high million-dollar salaries of many executives at the two firms. No date has been set for when the pay changes will go into effect. Many believe that no member of Congress wants anyone related to government to earn more than they do - maybe they should check out the Cal football coach's salary of over $2 million.

The industry continues to ruminate on the Fannie-Bank of America rift. Attorney Phil Stein writes, "Now, Fannie Mae is pressuring lender Bank of America to cover losses incurred by insured home loans that have defaulted, but on which the PMI company is refusing to pay.  Bank of America, to its credit, is resisting these demands, perhaps weary (and wary) of making such payments after having already entered into a multi-billion dollar settlement with Fannie only a little more than one year ago."

Mr. Stein continues: "But the kudos to BofA end there.  It is notable to those of us who regularly represent correspondents that BofA is not merely refusing to repurchase additional loans from Fannie, but is doing so on the grounds that there was no adequate reason for the PMI companies to fail to pay out mortgage insurance when these loans defaulted.  This is consistent with the stance that BofA took as early as its lawsuit against MGIC, but BofA nevertheless routinely makes repurchase demands to correspondents based on the mere fact that PMI has been rescinded (whether it has been rescinded rightly or wrongly is of no particular concern to BofA in such cases). This is yet another important instance of BofA taking public positions that are directly contrary to its assertions when it makes buy-back demands on correspondents. Correspondents can use this inconsistency to their distinct advantage in contesting demands made by BofA.  It is also interesting, incidentally, that Fannie has now claimed that it cut off purchases from BofA, rather than BofA deciding to stop selling to Fannie. While they sort out who broke up with whom, let's hope that the correspondents will be given a well-deserved respite from BofA's unfounded buy-back demands." (If you'd like to follow this and other mortgage legal issues, Phil's writings can be found at

Legal issues are now a fact of life in mortgage banking and real estate. The Supreme Court has heard oral arguments on whether or not splitting an unearned fee violates the Real Estate Settlement Procedures Act (RESPA). The case is Freeman v. Quicken Loans, and is intended to settle a dispute among the federal circuit courts regarding the statutory interpretation of Section 8(b) of RESPA which prohibits giving or accepting "any portion, split, or percentage" of any charge for settlement services "other than for services actually performed." The issue in Freeman is whether Section 8(b) applies to an unearned fee charged by the loan originator. Quicken Loans charged the borrower discount points which did not go to reduce the borrower's interest rate, and the borrower claims the charges are unearned and not for services actually performed. All agree that if the fees were split with a third party, the arrangement would be illegal under RESPA. In this instance, however, Quicken Loans did not split its fees with a third party. Will the Supreme Court accept Quicken Loans' argument that if Congress had intended to hold settlement service providers in violation of the Act for charging an unearned fee, it would have clearly said so (as it has done in other instances) or will the Court find that the charging of unearned fees violates the Act whether those fees are split between two parties or kept in their entirety by the lender? Stay tuned for June, when the decision is expected.

Friday was a good day for MBS prices, prompting one veteran trader to note, "Mortgages were harder to keep than a Lindsay Lohan court date." But it's Monday again, which means we have a week of economic data to chew upon. There is zip for today, tomorrow is Retail Sales, Business Inventories, and an FOMC meeting adjournment (no change to overnight rates expected), Wednesday is Import & Export Prices, Thursday the usual Jobless Claims but also the Producer Price Index, Empire Manufacturing, and the Philly Fed survey. Friday is the Consumer Price Index, Industrial Production & Capacity Utilization, and a University of Michigan survey. In the early going, the U.S. 10-yr, which closed at 2.04% Friday, is coming in around 2.01% and MBS prices are about .125 better than Friday's close.

An Australian, an Irishman and an Englishman are in a bar. They're staring at another man sitting on his own at a table in the corner.
He's so familiar, and not recognizing him is driving them mad.
They stare and stare, until suddenly the Irishman twigs: "Holy smokes, it's Jesus!"
Sure enough, it is Jesus, nursing a pint.
Thrilled, they send him over a pint of Guinness, a pint of Fosters and a pint of bitter.
Jesus accepts the drinks, smiles over at the three men, and drinks the pints slowly, one after another.
After he's finished the drinks, Jesus approaches the trio.
He reaches for the hand of the Irishman and shakes it, thanking him for the Guinness.
When he lets go, the Irishman gives a cry of amazement: "My God! The arthritis I've had for 30 years is gone. It's a miracle!"
Jesus then shakes the Aussie's hand, thanking him for the lager.
As he lets go, the man's eyes widen in shock. "Strewth mate, the bad back I've had all my life is completely gone! It's A Miracle."
Jesus then approaches the Brit who says, "Back off, mate, I'm on disability benefit."